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On Tuesday, Piper Sandler adjusted its outlook on McDonald’s Corporation (NYSE:MCD) shares, reducing the price target from the previous $297.00 to $290.00 while maintaining a Neutral rating on the stock. According to InvestingPro data, analyst targets for McDonald’s currently range from $280 to $360, with the stock trading near its Fair Value. The adjustment comes as the market anticipates McDonald’s fourth-quarter earnings for 2024, scheduled for release in 6 days.
Analysts at Piper Sandler have conveyed their perspective on the fast-food giant’s performance, noting that the consensus estimate for McDonald’s U.S. same-store sales (SSS) in the fourth quarter is a decrease of 0.6%. They believe that investor expectations are aligned with or slightly below this estimate. InvestingPro reveals that 14 analysts have revised their earnings downward for the upcoming period, while the company maintains strong fundamentals with a GOOD overall financial health score. The focus, however, seems to have shifted more towards the first quarter of 2025, where current quarter-to-date trends are purportedly trailing behind the consensus estimate of a 1.3% increase.
The firm suggests that a miss in the first-quarter results is already anticipated by investors, but the extent of this shortfall remains a topic of discussion. The magnitude of the potential miss and management’s tone during the upcoming earnings call are expected to be significant factors for investors.
Piper Sandler’s commentary indicates that while a first-quarter earnings miss for McDonald’s is expected, the details of how far the actual results deviate from expectations could impact investor sentiment. The firm’s note also touches on broader industry topics but emphasizes the importance of the forthcoming earnings report and management’s outlook in shaping investor perspectives on McDonald’s future performance.
In other recent news, McDonald’s Corporation has seen a series of significant developments. KeyBanc Capital Markets has lowered its price target for McDonald’s shares to $320 from $330, while maintaining an Overweight rating. The company’s U.S. same-store sales (SSS) growth estimate for Q4 2024 has been revised downward due to severe weather conditions and an E. coli outbreak. Nevertheless, McDonald’s has shown resilience, boasting strong fundamentals with a 56.6% gross profit margin and a history of raising its dividend for 49 consecutive years.
On the technology front, McDonald’s has extended its partnership with Cognizant (NASDAQ:CTSH) to streamline enterprise applications and advance its cloud journey. This collaboration is expected to leverage Cognizant’s expertise in digital engineering, quality assurance services, and cloud and AI innovations.
In terms of governance, McDonald’s board member John J. Mulligan is set to retire at the 2025 Annual Shareholders’ Meeting. The retirement is not due to any disagreements with the company’s operations, policies, or practices.
Various firms have maintained their positive outlook on McDonald’s. Morgan Stanley (NYSE:MS) has kept its Overweight rating, albeit with a slightly reduced price target of $336.00. Similarly, Loop Capital has maintained its Buy rating, despite a slight underperformance in same-store sales growth in Q4 2024. BMO Capital Markets has spotlighted McDonald’s as a top restaurant stock pick for 2025, due to its potential for strong sales growth and market outperformance. These insights are based on recent analyst notes and company announcements.
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